In re Jaffee

MORTON, District Judge. [1, 2] The principal question is whether the referee had power to refuse to approve as trustee a person elected by the creditors solely because he resided and did business in Boston, while the bankrupt’s business was in North Adams. As the evidence is not reported, the referee’s findings must be accepted, unless they appear on .his report to be clearly wrong. If, on any state of facts consistent with his report, he had power to disapprove upon the ground stated, his action must be confirmed. [3] The appellant argues that a large majority of the creditors favored his election, and refers to decisions holding that the views of creditors are entitled to great weight on such a question. Very few parts of the Bankruptcy Act (Comp. St. §§ 9585-9656) are, from an administrative point- of view, less satisfactory than the method of choosing trustees. Theoretically the creditors interested make the selection. Practically they pay very little attention to it. They generally turn their claims over to agencies or to other persons, and the claims are apt to be voted upon considerations in which the best interests of the estate cut a small figure. [4] It is always an advantage to have the liquidating officer in close touch with the business being liquidated. In appointing receivers, I often insist on local men. In some cases it may fairly be said to be essential to have somebody who will be in daily contact with the business; in others, that would not be required. Each case stands on its own facts. On such purely administrative matters the judgment of the learned referee is entitled to great weight. It is not to be assumed that he disregarded the votes of the creditors, without strong reasons for so doing. The record does not show that they were inadequate, nor that this estate is not of such character as to require for its proper liquidation a trustee in closer contact with the business involved than, one resident in Boston, which is at the other end of the state from North Adams. After disapproving the choice of Mr. Wasserman, the learned referee afforded the creditors an opportunity to select a trustee whose residence would meet his views as to the necessities of the case, and he approved the person then chosn by them. [5] The appellant suggests fhat General Order 12 (89 Fed. vii, 32 C. C. A. xvi) goes beyond the act, and is invalid in so far as it gives the referee power to decide upon the competency of the person elected by the creditors as trustee. . This question can hardly be considered in a court of first instance; it must be decided by the Supreme Court, by which the General Orders were made. Order affirmed.